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Assembly Budget Committee Reviews Gov. Jerry Brown's FY 2012-13 Budget Proposal

Controller Announces that State May Run Out of Cash in March

January 31, 2012

Today the Assembly Budget Committee met to review Gov. Jerry Brown's FY 2012-13 budget. Following this hearing budget items will be assigned to budget subcommittees for more detailed review. The full Assembly analysis is available online.


During the hearing, the Department of Finance (DOF) and the Legislative Analyst's Office (LAO) presented data regarding the state's projected $9.2 billion deficit and expected cuts. Both DOF and LAO were optimistic about the state's current fiscal situation saying that while difficult it is significantly improved from last year. Committee members focused particular attention on education funding and the Governor's revenue assumptions, including his tax initiative.

Also today, State Controller John Chiang announced that the state could face a $3.3 billion cash deficit by early March unless the Legislature and Governor intervene. This announcement was somewhat surprising, as legislators had originally been optimistic that the state would not experience a cash flow problem this year. Chiang attributed the problem to lower than expected tax revenues and higher than expected state spending.

The Assembly Budget Committee addressed this shortfall by approving SB 95, which would allow the state to borrow specified Highway Users Tax (HUTA) revenues for short periods of time. These loans are not expected to delay HUTA payments to cities, however, the League has asked for some technical amendments to clarify this point. The bill would also provide a continuous appropriation of HUTA which is positive news for cities because it ensures that payments will continue to cities and counties even when the state budget is late.

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